MOSCOW. (Andrei Vasilyev for RIA Novosti) - Hugo Chavez, the Venezuelan president, has repeated his intention to further develop economic cooperation with Russia, which he calls a "strategic union."
One of the components of this cooperation will be the strengthening of Venezuela's defense capabilities, but prospects in fuel and energy are looking good, too.
"People often ask me if Venezuela is going to buy submarines. 'Why not?' I answer. We have half a million square kilometers of territorial waters. That's a great expanse. What is strange about our buying a submarine? No one need worry. Will it carry weapons aboard? It will," the Venezuelan president said by way of sharing his thoughts before departing for Moscow.
His plans irritate the United States, but not because Washington sees in Venezuela a threat to U.S. security. Neither five nor nine diesel submarines, even armed with tactical missiles, can do serious damage to the U.S. Navy. In the same way, the 24 Su-30 fighter jets bought in Russia for Venezuela's air force cannot capture airspace above America. But those forces are, however, enough to keep uninvited guests as far away as possible from Venezuelan oil fields.
Venezuela is one of the world's richest countries in proven oil reserves, which are estimated at 77.7 billion barrels. It ranks sixth on the list of the biggest oil countries. Geographically, it is closer to the United States than most other producers, making it one of the main hydrocarbon suppliers for the American market. In early 2000 more than 60% of the South American country's oil went to its northern neighbor.
Now supplies amount to 1.5 million barrels a day. In a recent interview with America's ABC television network, Chavez said his country had no intention of reducing or halting deliveries, but added that should the United States become aggressive, Venezuela would cut off oil exports.
The Venezuelan president is capable of doing so. The country's oil sector was nationalized in 1999, before Chavez came to office. But a number of oil companies - Exxon Mobil, Chevron and Conoco Phillips of the United States, as well as British Petroleum, France's Total and Norway's Statoil, which exploited the Orinoco oil belt, kept a measure of autonomy. This arrangement continued until February 27 of this year, when Chavez signed a decree putting all oil fields under the control of Petroleos de Venezuela, or PDVSA, the state-owned petroleum company. But for foreign corporations, the document did not mean an end to their activities in Venezuela. The president proposed that they set up joint ventures with PDVSA by transferring controlling stakes to the state corporation.
"We do not want multinational corporations to leave," Chavez said at the time, stressing, however, that oil was a strategic sector of the economy and could not be held in private hands. Chavez needs oil, or rather petrodollars, not only to re-equip his army, but, above all, to carry out social reforms in the country - in farming, health services and education. That is the purpose of barter arrangements with Cuba. Venezuela supplies oil and helps to modernize the oil refinery in Cienfuegos, built by the Soviet Union, which will process up to 65,000 barrels of oil a day, and Cuba in turn sends doctors and teachers to Venezuela.
But Chavez has more ambitious plans. He is going to use oil to cement a union of Latin American countries, which he believes should become a new center of force on the continent. Although many of his fellow regional presidents do not support Chavez's anti-American sentiments, they would not mind strengthening their independence from the United States with the help of cheap Venezuelan hydrocarbons. That is why they have given wholehearted support to plans to build a transcontinental gas pipeline from Venezuela to Argentina, Brazil, Uruguay and Paraguay. The line will be 8,000 kilometers long and cost $23 billion. Later on, Bolivia will contribute its gas to this system.
Gazprom is prepared to help the Latin American countries with their project. It has offered to cooperate in manufacturing pipes, laying the pipeline, and producing liquefied natural gas. The first agreements with participants in the South American gas pipeline have already been signed. Chavez has praised the assistance provided by Russian companies. Aside from Gazprom, LUKoil is also working in Venezuela, assessing and certifying oil reserves in the Orinoco region.
The Chinese and Japanese have no objections to supporting Venezuela's reorientation of its oil and gas flows, either. They increasingly need energy from more stable areas than the Middle East. During his visit to Beijing, Chavez reached an agreement on a sixfold increase in oil exports to China: from 150,000 barrels to one million barrels a day by 2012. Japanese trade and investment companies Marubeni and Mitsui Bussan have signed a 15-year contract with PDVSA for the supply of 200,000 barrels of oil a day.
But Chavez's new oil policy does not suit American companies. Exxon Mobil and Conoco Phillips have announced that they are winding up their operations in Venezuela. British Petroleum, France's Total and Norway's Statoil, however, have expressed their readiness to transfer to the Venezuelan government the rights to develop oil fields on the Orinoco River, deciding that a bird in the hand is worth two in the bush.
Washington is particularly concerned. In his annual State of the Union address to Congress, George W. Bush devoted half of his time to talking about measures to safeguard the country's energy security. America depends on oil, the president said, which is often imported from unstable regions of the world. In his view, the United States should free itself of that dependence as soon as possible by developing alternative technologies.
But since alternative sources are still a long way off, the United States is now trying to put all sorts of pressure on Venezuela. Recently Congress held hearings on the growth of global oil demand and its effect on U.S. security. In the view of some legislators, oil dependence is preventing America from achieving some of its foreign policy goals, while rising hydrocarbon prices enable producer countries, such as Iran or Venezuela, to work against U.S. interests.
The situation on the energy market does not look good for the United States. Worldwide oil consumption, as forecast by the U.S. Energy Department, will grow by 1.4 million barrels a day in 2007, and by 1.6 million barrels in 2008. Natural gas consumption will rise by 3.4% this year, and by another 0.9% in 2008. China and America will account for about half of the oil consumption
growth in 2007-2008.
Washington's concerns are largely dictated by self-interest. There is enough oil to go around. Only countries that produce it should control it in the first place. Naturally, producing countries should take into account the interests of their neighbors and the world community, but not to the extent that the producers' own interests are compromised. That is their right, and Venezuela's right, too.
Andrei Vasilyev is a political analyst.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
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